Tips for Buying a Second Home on Lake George
Second homes, or vacation homes, have become one of the fastest growing home buying trends in the United States. If you are one of the more than 30 million Americans who are expected to enter the second home market within the next decade, and you are interested in a vacation home on Lake George, here are some questions to ask yourself and tips to help you make a sound decision.
Can I afford a Second Home?
If you have reasonably low debt, and money left over at the end of the month, you can probably afford a second home. Lenderssimply verify that your debt does not exceed 40 percent of your gross income. However, be prepared to pay a higher interest rate. Mortgage rates on second homes tend to be a quarter or even half a point higher than on your first mortgage. Homeowners insurance is often higher on a vacation home, too, since the insurer assumes you won’t be there as often. But if you stay with the same company for both homes, they may offer you a discount.
And remember, a second home can actually help you out on your taxes. If you live in your vacation home for more than 14 days per year – and do not use it as a rental property – you can deduct 100% of the mortgage interest you pay on both homes up to $1.1 million in combined debt. You can also write off property taxes on all the properties that you own.
Is Lake George Right for Me?
It’s important to think about the amount of time you will be spending in your Lake George vacation home, and how you plan to use it. For instance, if this house will be mainly for weekend getaways, than anything more than a two hour drive will seem like a long trip. It’s also a good idea to visit the area in all seasons. While Lake George is most popular as a summer vacation destination, the Adirondacks offer residents an abundance of beauty and things to do all year long.
If you think you may retire in your second home one day, it’s important to make sure the area can support your lifestyle. The great thing about Lake George is that you have quality, accessible healthcare nearby, as well as the ability to pick-up part-time work if you desire.
A Guide to Shopping for Your Second Home
I recommend that my clients attend a handful of Lake George open houses and private home tours, as opposed to only taking virtual tours online. I also suggest that we look at a wide variety of houses, both above and below what you can afford, to truly compare the price that you're paying and the value you're getting for that price.
Keep in mind, a vacation property is likely to have more blemishes than your first home. Homes that are built as vacation homes often aren't built as well as year-round homes. Your most valuable resource is a good real estate agent, one who is not only well-versed in Lake George real estate and the second home market, but who can help you find a reliable home inspector.
Tips for Renting Out Your Second Home
Nearly half of second homeowners leave their homes unoccupied for more than 300 days a year, which means an occasional renter can help offset some of your expenses. Just don’t expect it to cover your entire monthly mortgage.
If you’re going to be renting, I recommend that my clients hire a good accountant, and maybe even a property management company that will guarantee the condition of the property and help with screening tenants.
Consider renting only by the month or the season, as longer-term renters tend to take better care of a property. On the other hand, if your house is rented out for fewer than 14 days a year, you don't have to report that income to the IRS.
Lonnie Lawrence is a licensed real estate broker and lifetime resident of Lake George. Her 40+ years of experience and vast knowledge of the region have made her an expert on Lake George Real Estate.